Many investors compare stocks to determine values. One form of comparison is the price-to-sales ratio, which is also known as the P/S ratio. It is calculated by multiplying the number of shares by the price per share and then dividing that number by the company’s total sales over the past year. If that P/S ratio is low, then the stock is more favorable in investors’ eyes. Three stocks on the cheap right now are National-Oilwell Varco, Inc. (NYSE:NOV), ArcelorMittal SA (ADR), and Kinross Gold Corporation (USA) (NYSE:KGC).
National-Oilwell Varco, Inc. (NYSE:NOV) was at last close at a price of $39.73 per share. Its market value is $15.25 million. The P/S ratio is currently at 0.86, which is in comparison to the industry average at 0.46. Looking back five years, one can see the company’s sales have increased at a rate of about 7.50% a year, with a 20.30% share grown in its earnings.
ArcelorMittal SA (ADR) had a decline in profit by -1.67% over the last five years. Meanwhile, its growth in sales has been at a more accelerated rate of 9.80% a year over that same five-year period, on average. The P/S ratio is at 0.08 for the stock, which is much lower than the industry average at 1.25. As for the one-year low, that was $-47.14.
Kinross Gold Corporation (USA) (NYSE:KGC) closed most recently at $1.86 a share; its price is higher this year by 2.205%. The price-to-sales ratio is at 0.63, which is lower than the average of the industry. The average is at 2.09. The company’s sales have declined in rate (22.30%), while its earnings maintained at 51.70% over the last five years.
For stocks, investors can look at low P/S ratios as being a way to value a stock that has had a short-term setback. The P/S is generally thought to be a valuable way to evaluate stocks.